In its final rule setting out the Contract Year 2027 Policy and Technical Changes for the Medicare Advantage Program and Part D Prescription Drug Benefit, the Centers for Medicare and Medicaid Services (CMS) laid out major structural changes to the Star Ratings systems, most of which will go into effect for the 2027 review period and impact payments beginning in 2029.

According to CMS’s regulatory analysis, the Star Ratings changes are likely to transfer approximately $18.5 billion dollars over the next ten years to Medicare Advantage and Part D plan sponsors. This transfer will be primarily the result of the final rule’s elimination of  thirteen star ratings categories and the agency’s decision not to proceed with Health Equity Index rewards.

What has changed?

Removing measures from Star Ratings 

In its final rule, CMS has removed ten Star Ratings measures: six of which apply only to Medicare Advantage, one of which applies only to Medicare Part D, and three of which apply to both. Given that three measures are mirrored in Parts C and D, CMS is actually eliminating thirteen ratings measures. Three of the thirteen removed measures will be eliminated beginning with the 2028 ratings period. The remaining eight measures will be removed as of the 2029 ratings period.

The table below details which measures will be eliminated and when. The measure codes in the table are based on the Medicare 2026 Part C&D Star Ratings Technical Notes from September 2025.

According to CMS, the removal of these thirteen ratings measures may result in lower ratings since CMS indicates that “performance on many of these measures is very high.” However, many of these measures, in particular the call center and appeals measures, faced challenges from plans that claimed that they were being unfairly applied by CMS.

Adding a depression screening measure

CMS also decided to add an additional measure for the 2027 review period that will apply to the 2029 Star Ratings. The new measure would track the percentage of Medicare Advantage plan members who were screened for clinical depression using a standardized instrument and, if screened positive, received follow-up care within 30 days.

According to CMS, adding this measure would align with U.S. Preventive Services Task Force recommendations and fill a gap in the Star Ratings framework as there are not currently any measures specific to behavioral health care.

In application, CMS plans to display the rates for depression screening separate from the rates for follow up care, but has indicated it will average of the two rates when scoring the measure.

Reversion to historical reward factor instead of Health Equity Index

In addition to the eliminated measures, CMS has decided not to implement a change to the reward factor. In its 2024 final rule, promulgated during the Biden administration, CMS sought to replace the historical reward factor that incentivized high performance across multiple Star Ratings categories with a Health Equity Index (HEI) reward factor. The HEI reward factor was intended to incentivize plans to focus on improving care for enrollees that are dually eligible, receive a low-income subsidy, or are disabled as those groups were historically at risk for poor health outcomes and showed gaps in quality of care.

According to CMS, many of the commenters approved of this decision to revert back to the historical reward factor. Among the reasons given for this was a perception that a move to the HEI reward factor would be biased against those contracts that would be unable to meet the enrollment thresholds such as smaller, more regional plans and plans in states that did not expand Medicaid enrollment. CMS also indicated that the decision to revert to the historical reward factor was an effort to provide more stability and reward consistently high performance across all of the star ratings measures. 

Pursuant to the new final rule, CMS will instead continue to apply the historical reward factor, originally added to the Star Ratings system in 2009, which CMS claims will incentivize improvement efforts on clinical care, outcomes, and patient experience. According to CMS, this change will cause ratings to increase in a way that will likely overcome any reductions to ratings caused by the removal of the eleven measures.

Why the changes?

CMS asserts that the changes to the Star Ratings are designed to refocus and streamline the program. CMS’s stated goal is to refocus the program on clinical care, outcomes, and patient experience where meaningful performance differences exist across contracts and reduce administrative burden by removing measures that provide little meaningful distinction between plans.

CMS also signaled that more changes may be on the horizon. The final rule specifically states that CMS will continue to evaluate all the measures in the Star Ratings program to determine whether or not they are serving the programs purpose or if they should be amended or removed.

What does this mean for plans?

Starting with the 2027 review period, which involves the data that will be used to calculate 2029 star ratings, plans should focus their efforts on those measures that will actually be evaluated by CMS. A focus on clinical care, outcomes and patient experience should result in higher Star Ratings and the higher possibility for bonus payments for plans.  Plans should also take stock of the operational efforts and issues to date related to the call center and statin scoring, which will not be measured in the 2028 year.

Reed Smith will continue to track developments with regard to the Star Ratings program as well as Medicare Advantage and Part D payments. If you have any questions about this, please do not hesitate to reach out to the attorneys at Reed Smith.